Join the Conversation

The Goldmoney Community is a great place to securely share and connect with other people that are passionate about the same things you are! Get your questions answered, share your ideas and feedback, start a discussion, and give back by helping others! Create your Goldmoney Community handle now to join the conversation.

Why Bitcoin Investors Should Convert Their Virtual Funds into Gold?

Guest post. The virtual currency Bitcoin is currently celebrating a suspicious comeback. On Wednesday, November 4, it surged 25% and has reached the $500 mark for the first time since summer 2014. Just two months ago, the currency has been valued at about $200.During the last three days, the currency has appreciated by 40%. In October, it has gone up almost 70%. Such a fast price increase is most likely not sustainable and indicates a bubble. Investors should watch out.

There are a variety of factors affecting Bitcoin prices. Experts say, that the Bitcoin will benefit from technological developments in the next ten years. Nowadays, for example, more banks use blockchain technology, which is also used for Bitcoin trading. However, that is a long-term trend and certainly not enough to explain price increases of more than 100% in just two months.Right now, the economic crisis in China seems to be the most significant driver. After the Chinese economy got hit in August and the government devalued the currency, Investors are leaving the market in an attempt to secure their assets.Considering that Chinese investors hold more than $22 trillion in savings accounts, this trend has a huge firepower. So far, capital flight from China has almost reached $700 billion in 2015.Currently, about 90% of the global Bitcoin trade is taking place in China, because the virtual currency is a comfortable way for investors to get their money out of the country. In October, European courts decided that exchanging Bitcoins for Euros or other European currencies will be tax-free. Therefore, it has become attractive for investors to buy Bitcoins instead of directly converting their Yuans into Euros.Moreover, China’s government is trying to limit capital flight by restricting transactions of more than $50,000. Bitcoins, however, are traded anonymously. Therefore investors can use them to avoid trouble with regulatory authorities.Bitcoins are not backed by any central bank; enormous fluctuations are common and pose risks for investors.

On the contrary to other currencies, Bitcoins are not backed by any central bank. Supply and demand determine prices, which can lead to significant fluctuations. In 2013, for example, demand exploded and prices went up from about $20 in January to $1200 in December. When Mt. Gox, one of the world’s leading Bitcoin exchanges, filed for bankruptcy in early 2014, prices collapsed.

Lack of regulatory controls have made Bitcoin less predictable than other currencies. Investors should take the current upsurge with a grain of salt. What goes up quickly could come down quickly, too. The current Bitcoin trend might not hold for long, investors should try to secure their funds in physical investment vehicles where they can.

Gold prices are currently low and online platforms like Bitgold make it easy to exchange Bitcoins for gold without high costs

A good strategy to secure funds is to convert some of this digital value into physical value. Investors who are looking for a safe haven, which doesn’t make them a subject to monetary policy, should take a look at physical investment vehicles.

Gold is especially attractive right now, because prices are low. Investors expect a Fed interest rate hike soon, which has pushed the precious metal below its recent support levels. Additionally, there is lower demand from jewelers and retailers, which has further driven gold prices down during the last months.

Moreover, another big advantage of the metal is that it’s fairly easy to convert Bitcoins into physical gold. Online platforms like BitGold offer investors the opportunity to buy gold directly with Bitcoin. The company even offers its clients to store their gold for free at over ten physical brinks locations internationally.

Although the latest rise of the Bitcoin is not yet comparable with the bubble in 2013, it is not realistic to assume that this trend will continue for long. Investors should be vigilant and secure their funds. As equities and bonds are not very safe neither, gold would be a fairly good way to get at least some of your funds out of the danger zone.

I am not a believer in bitcoin as I don't see any intrinsic value. Might as well go to Vegas and bet on black. For those that do believe in it, I would be concerned/cautious when "one of its lead developers, Mike Hearn, said in a blogpost that he was ending his involvement with the cryptocurrency and selling all of his remaining holdings because it had "failed"."

Since there is this thread in regards to exchanging bitcoin for GOLD I would have to agree. Article below in regards to the quote from above.

To set the record straight … My post above wasn't in support of BitCoin, merely the chart of BitCoin in terms of grams of gold. If I had BitCoin I would be buying gold in BitGold.

Despite the technology, BitCoin still seems like "smoke and mirrors" to me with none of the checks and balances and security of BitGold. What BitCoin has in anonymity, BitGold makes up for in transparency. BitGold supports a wide variety of deposit and redemption options with speed, flexibility, and low cost.

PS @BigD you are correct, betting on red is a much surer bet than betting on black.

I 'm not "crazy supporter" of bitcoin, i prefer gold as well.i had invest in bitcoin 3 years ago and i had a good profit from this cryptocurrency.As investments i believe that both of them are good.For sure gold is better.;-)

Bitcoin is actually quite transparent. Users may be have a veil of anonymity, but every single transaction is actually recorded in the blockchain, with each transaction linked to unique addresses of the transaction participants. And it's actually not even that anonymous as result (that's the reason for some bitcoin alternatives like Darkcoin) -- all transactions are public and traceable. This ledger is updated simultaneously around the world on many computers and servers, so there is no single node for failure.

Bitcoin operates on the concept of a "trustless" system, that is that oversight is not required because transparency and "checks and balances" are built right in to the way the system operates (there is no one needed to "trust" in the first place). This also removes the need for many intermediaries, which is why transactions can be very cheap using it. And in fact, that is why the major banks around the world are actually trying to develop their own "private" version of the Blockchain (you can read about that here and here). However, the bank consortium blockchain actually removes the inherent transparency built into the Bitcoin blockchain, which is always publicly accessible.

Some argue that the bitcoin blockchain is actually the most transparent financial mechanism ever devised.

For me, the major benefit of BitGold versus something like bitcoin is the underlying asset. The fundamental base of bitcoin is effectively some computer code. The fundamental base of BitGold is an actual chunk of physical gold. That's quite something!

Reasons to Sell your BitcoinA great alternative for a non-fiat currency replacement could be gold. The established global standard for currency backing and a store of wealth for millennia, gold has and shows signs that it will continue to be a steady, reliable alternative to government-issued currency, and, following a bitcoin bubble burst, a good alternative to cryptocurrency as well.

The bottom line is that bitcoin is volatile, has yet to be fully recognized by governments, and the technology backing it is not yet fully developed. Gold is a stable store of value and has been since the beginning of recorded human history.